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USA: Should Kohl’s buy At Home?

Author: Tom Ryan

Source: RetailWire

Kohl’s is holding preliminary discussions to acquire At Home, the home decor superstore with 188 locations, according to Reuters.

The acquisition would help Kohl’s, with more than 1,100 locations, diversify its business away from the department store model and apparel category and possibly help expand its home category business within its own stores.

Home accounted for 19 percent of Kohl’s sales in 2018 and has been a top performing category over the last two years.

At Home claims to offer the largest assortment of home décor products (more than 50,000 unique items per store) among all big box retailers due to the size of its stores, which range from 75,000- to 165,000-square-feet. Over 70 percent of its products are unbranded, private label and drive attractive price points. The retailer’s “Best Price Every Day” ads compare At Home’s prices to similar items at Wayfair, Michael’s, Pier 1, Bed Bath & Beyond and Home Depot.

Currently in a fast-track expansion mode, At Home plans to open 32 stores this year and sees the potential for 600 locations in the U.S.

At Home currently does not offer e-commerce, but said it may in the future. In its 2018 10K filing, At Home points to findings from Cooper Roberts Research last year that showed “while home décor shoppers may prefer browsing online, they value low prices, a wide selection and the opportunity to experience the look-and-feel of products in stores before making a purchase.”

The Reuters report indicated that At Home, which went public in 2016, began exploring a sale a few months ago due to poor stock performance. Sources indicated the retailer is in advanced discussions with private equity firms, including Hellman & Friedman.

Kohl’s introduction of Amazon return centers indicates management is open to reinventing its business model, although its last significant acquisition was 31 Mervyn’s leases following that chain’s bankruptcy in 2008. Increasing competition in the home goods space is also coming from Amazon.com, Walmart and Target, which all launched furniture and home goods private labels in recent months.



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